INSTANT VIEW: Consumer confidence, new home sales rise

NEW YORK (Reuters) - U.S. consumer confidence recovered far more than expected in August as worries over inflation eased, the Conference Board said on Tuesday.

NEW HOME SALES

Sales of newly constructed U.S. single-family homes in July were lower than economists expected but rose from a June pace that was the slowest in nearly 17 years, a government report showed on Tuesday.

KEY POINTS:

CONSUMER CONFIDENCE: * The Conference Board said its index measuring consumers' mood jumped to 56.9 this month from July's 51.9, reaching the highest level since May.

* That was well above economists' expectations for a reading of 53.0, according to the median of their forecasts in a Reuters poll. The 79 forecasts ranged from 50.0 to 56.2.

* The improvement in sentiment came during a month when oil prices retreated further from July's record highs but consumers' evaluation of their present situation and the job market deteriorated further.

* The Conference Board, an industry group, said its gauge of inflation expectations fell to 6.7 percent from July's revised 7.5 percent. It hit a record high of 7.7 percent in May and June and was originally reported at 7.6 percent for July.

* The overall consumer confidence index dates back to 1967. Its lowest reading ever was 43.2, which it hit in December 1974.

NEW HOME SALES: * Economists polled by Reuters were expecting to sales to remain unchanged at the 530,000 annual pace first reported for June. The actual sales pace in July of 515,000 climbed from the revised June level of 503,000, which was the lowest since a 487,000 pace in September 1991.

* The inventory of homes available for sale shrank 5.2 percent to 416,000, the lowest since October 2004. The July sales pace put the supply of homes available for sale at 10.1 months' worth. * The median sales price rose slightly to $230,700 from $230,100 from June, but was down 6.3 percent from a year earlier, the government said.

COMMENTS:

ARTHUR HOGAN, CHIEF MARKET ANALYST, JEFFERIES & CO, BOSTON:

Consumer confidence: "It's as good as it looks for a reason, and the reason is very closely tied to gasoline prices coming down, and that's OK. As they went up, you saw consumer confidence go down, so the reverse should hold true."

Housing: "Not a major surprise. It's very difficult for either the existing home sales or the new home sales data to come out and surprise us because we know that residential real estate continues to be in a quagmire. So I don't think that moves the market necessarily."

"It's fair to say two things: the economic data calendar gave us a mixed message today on balance, and the market may well be moving more on the fact that oil's up $2.50 than necessarily that consumer confidence is up 3 percentage points more than we thought it would be."

DANA SAPORTA, ECONOMIST, DRESDNER KLEINWORT SECURITIES LLC, NEW YORK:

CONSUMER CONFIDENCE: "I attribute the increase to the drop in gasoline prices, which offset a deteriorating labor market, But confidence is still quite depressed, but it's a glimmer of hope from the lows we saw in June.

"Nevertheless, we still look for consumer spending to fall in the coming months."

NEW HOME SALES: "It's a good sign, It's probably price driven. This is the first step in an improvement in housing. There are some signs the worst has passed us. and that's best we could say for now."

"Another positive sign is the month-supply figures fell. This indicates builders are slowing down with their activity, but this will be continued drag on the GDP through 2009."

BRIAN DOLAN, CHIEF CURRENCY STRATEGIST, FOREX.COM, BEDMINSTER, NEW JERSEY:

"Overall, we're still trading oil in the currency markets. And oil is back off its highs but still relatively elevated and that's what's keeping the dollar in check at the moment. The home sales: not a huge surprise, they were actually up from the prior revised lower. We know that the housing market is weak and new home sales is the weakest segment of that market. That data tends to get discounted."

MATTHEW STRAUSS, SENIOR CURRENCY STRATEGIST, RBC CAPITAL MARKETS, TORONTO:

"U.S. consumer confidence saw a decent rebound, although it remains low overall in historical terms. But because it is an upside surprise, it is positive for the dollar.

On new home sales, they may have been weaker-than expected but yesterday's existing home sales numbers were better than forecast. Overall, I would think that the new home sales report would have little impact on the dollar as U.S. housing problems have already been priced in the market." MARKET REACTION: STOCKS: U.S. equity indexes turn up modestly BONDS: U.S. Treasury prices add to losses DOLLAR: U.S. dollar adds to gains RATE FUTURES: Fed fund futures are little moved, suggesting little chance of an FOMC rate hike this year OTHER DATA FROM AUG 26: * Standard & Poor's/Case Shiller national home price index:

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